Vartanian v. Monsanto Co.

• Decision Date: 07 October 1993
• Docket Number: No. 93-1611,93-1611
• Citation: 14 F.3d 697
• Parties: -1209, 62 USLW 2509, 17 Employee Benefits Cas. 2185 Leo VARTANIAN, Plaintiff-Appellant, v. MONSANTO COMPANY, et al., Defendants-Appellees. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 697

14 F.3d 697

73 A.F.T.R.2d 94-1209, 62 USLW 2509,

17 Employee Benefits Cas. 2185

Leo VARTANIAN, Plaintiff-Appellant, v. MONSANTO COMPANY, et al., Defendants-Appellees.

No. 93-1611.

United States Court of Appeals First Circuit.

Heard Oct. 7, 1993.

Decided Feb. 2, 1994.

John C. Sikorski, with whom Robinson Donovan Madden & Madden, P.C., was on brief for appellant.

Richard J. Pautler, with whom Richard P. Sher, Peper, Martin, Jensen, Maichel and Hetlage, Francis D. Dibble, Jr., Bulkley, Richardon and Gelinas, and John S. Morrison, were on brief for appellees.

Before TORRUELLA, Circuit Judge, BOWNES, Senior Circuit Judge, and CYR, Circuit Judge.

TORRUELLA, Circuit Judge.

Appellant Leo Vartanian ("Vartanian") brought claims against his former employer, Appellee Monsanto Chemical Company ("Monsanto"), under the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. Sec. 1001 et seq., pursuant to Section 502(a) of ERISA, 29 U.S.C. 1132(a), as well as under common law, ¹ asserting that Monsanto breached its fiduciary duty and engaged in unlawful discrimination and misrepresentation. The district court dismissed Vartanian's complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), 822 F.Supp. 36. Vartanian appeals the district court's dismissal of his claims.

According to the facts alleged by Vartanian, Vartanian worked for Monsanto for nearly 37 years. He was a participant in the Monsanto Company Salaried Employees Pension Plan ("1986 Plan"). The 1986 Plan offered several options to retirees, including the option to receive various types of periodic payments (annuities) or to take all benefits in a lump sum. In accordance with the requirements of the 1986 Plan, Vartanian submitted a lump sum distribution request at least one year prior to his anticipated early retirement date. Vartanian submitted this request in March, 1990 for an anticipated early retirement date of May 1, 1991.

In February, 1991, Vartanian started to hear rumors that Monsanto was going to offer a more favorable early retirement package as a retirement incentive in the near future. Monsanto had a history of using early retirement incentive programs, having done so in 1981, 1985 and 1990. As rumors of early retirement offerings persisted, sometime in February or March, 1991, Vartanian asked his supervisor about the possibility of an early retirement offering and requested that the supervisor inquire about this possibility. Several weeks later, Vartanian's supervisor responded that he could not confirm any rumors and that there were "no plans" regarding the early retirement offer.

In April, 1991, Vartanian repeated the same inquiry to his supervisor who again responded that there were no plans regarding an early retirement arrangement. Vartanian also questioned the Springfield Personnel Supervisor as to the possibility of an early retirement incentive offering and was told that there were no plans for any such offering. The Springfield supervisor asked Vartanian if he would refrain from retiring on May 1, 1991 if such a program were available. Vartanian responded that he would want to study any new program and certainly have the option of delaying the effective date of his early retirement, depending on the option. Vartanian had in fact postponed a previously elected early retirement so he could work on certain projects for Monsanto. Vartanian retired as of May 1, 1991, and took a lump sum distribution of approximately $509,000 under the 1986 Plan.

On or about June 28, 1991, Monsanto's Board of Directors approved a restructuring plan which involved consolidating manufacturing operations, closing plants, reorganizing businesses and reducing the number of employees. As of February, 1991, when Vartanian made specific inquiries about early retirement incentive programs, Monsanto had, in fact, already given serious consideration to staff reductions and changes in the 1986 Pension Plan and was contemplating the formation of the Monsanto Special Voluntary Retirement Plan ("1991 Plan").

Vartanian alleges that he was denied a reasonable opportunity to make an informed decision about when to retire because Monsanto failed to disclose its consideration of an enhanced severance program. If Vartanian had received complete and truthful information, he would have continued to work at Monsanto until December 1, 1991 and, thus, would have been eligible for full benefits under the 1991 Plan announced on June 28, 1991.

Vartanian exhausted all administrative procedures and plan appeal procedures in his claim for benefits under the 1991 Plan. Monsanto denied Vartanian's claim because he had retired on May 1, 1991 and, therefore, was not employed by Monsanto on October 1, 1991, which was a requirement for eligibility to participate in the 1991 Plan.

In the court below, Vartanian alleged that Monsanto breached its fiduciary duty in violation of 29 U.S.C. Sec. 1104(a) by failing to disclose its intention to create a new, more generous retirement package or the fact that the company was giving "serious consideration" to such a plan. Vartanian claimed that as a result of his reliance on Monsanto's misleading statements to the effect that the company did not intend to create a more generous retirement package, he missed the opportunity to retire under the more advantageous provisions of the new plan which went into effect shortly after his retirement. Vartanian also alleged unlawful discrimination in violation of Section 510 of ERISA, 29 U.S.C. Sec. 1140.

Under Section 502 of ERISA, 29 U.S.C. Sec. 1132(a), only a "participant" or "beneficiary" may bring a private civil action. Vartanian claims that he had standing to sue because he was a "participant." The district court found, however, that Vartanian was not a "participant" as defined by 29 U.S.C. Sec. 1002(7) of ERISA and thus, did not have standing to sue under Section 502. Because Section 502 is the sole civil enforcement provision of ERISA, the district court dismissed both of Vartanian's ERISA claims. The district court also dismissed Vartanian's common law claims alleging misrepresentation. The court found that because these are state law claims which "relate to" ERISA, they are therefore preempted by Section 514(a) of ERISA, 29 U.S.C. Sec. 1144(a).

On appeal, Vartanian maintains that the district court erred in dismissing his claims. Vartanian argues that, at the time Monsanto made the alleged misrepresentations, he was a "participant" in an employee benefit plan (the 1986 Plan), that Monsanto's breach of its fiduciary duty caused him to leave shortly before the 1991 Plan was adopted. Furthermore, Vartanian claims that but for Monsanto's misrepresentations, he would be a "participant" in the 1991 Plan under 29 U.S.C. Sec. 1002(7) and, as such, he has standing to assert claims for breach of fiduciary duty, unlawful discrimination and misrepresentation under ERISA. ² He argues that the ERISA definition of "participant" refers to a person who is, or may become eligible for benefits "from an employee benefits plan" and does not require that the person be eligible for benefits from two employee benefit plans. Thus, because he was a participant in the 1986 Plan, he claims that, it was not necessary that he be a participant in the 1991 Plan in order to have standing under ERISA. In the alternative, Vartanian argues that, even if he does not have standing to assert claims under ERISA, this federal statute does not preempt his state common law claims and this case should be remanded to the district court for further proceedings to determine the merits of his common law claims.

STANDARD OF REVIEW

We review the district court's decision to grant the motion to dismiss Vartanian's claim under Federal Rule of Civil Procedure 12(b)(6) de novo. Kale v. Combined Ins. Co. of America, 924 F.2d 1161, 1165 (1st Cir.1991). We must accept the allegations of the complaint as true, and if, under any theory, the allegations are sufficient to state a cause of action in accordance with the law, we must deny the motion to dismiss. Knight v. Mills, 836 F.2d 659 (1st Cir.1987).

PREEMPTION

We first examine the district court's finding that Vartanian's state law claims are preempted by Section 514(a) of ERISA, 29 U.S.C. Sec. 1144(a).

Section 514 of ERISA supersedes "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan...." 29 U.S.C. Sec. 1144(a) (emphasis added). The Supreme Court has established that "a law 'relates to' an employee benefit plan ... if it has a connection with or reference to such a plan." Ingersoll-Rand, Co. v. McClendon, 498 U.S. 133, 139, 111 S.Ct. 478, 483, 112 L.Ed.2d 474 (1990).

In Ingersoll-Rand, Co., the Supreme Court identified two tests for determining whether a cause of action "relates to" and is thus, preempted by ERISA. First, a law is expressly preempted by ERISA where a plaintiff, in order to prevail, must plead, and the court must find, that an ERISA plan exists. Id. at 140, 111 S.Ct. at 483. The cause of action "relates to" an ERISA plan in this context because the court's inquiry must be directed to the plan. Id. Second, even where there is no express preemption, a cause of action is preempted if it conflicts directly with an ERISA cause of action. Id. at 142, 111 S.Ct. at 484.

In the present case, the existence of the 1991 Plan is inseparably connected to any determination of liability under state common law of misrepresentation. There is simply no cause of action if there is no plan. See id. at 140, 111 S.Ct. at 483. The alleged misrepresentations by Monsanto relate to the existence of the 1991 Plan and in order to prevail under a state common law claim for misrepresentation, Vartanian would undoubtedly have to plead, and the Court would have to find, that the 1991 Plan exists. See id. at 140, 111 S.Ct. at 483. Thus, under the first test set forth in Ingersoll-Rand, Co., Vartanian's claims "relate to"...